We expect to grow over 100% in India this year: Xiaomi CEO

The company, which crossed $1 billion revenue in India last year and managed to grab the second spot behind Samsung, plans to go aggressive in the country, which Lei views as the second most important market after China.Sidhartha&Pankaj Doval | TNN | March 28, 2017, 13:01 IST

Highlights

Jun Lei feels next wave of growth to come from offline sales,

He hopes GST will remove complication in taxation,

Xiaomi chairman and CEO Jun Lei is a sales man to the core - he even tries to market the $1 pen that his company sells as he winds up an interview with TOI. The company, which crossed $1 billion revenue in India last year and managed to grab the second spot behind Samsung, plans to go aggressive in the country, which Lei views as the second most important market after China. It is also looking at stronger brick-and-mortar retail presence in India and elsewhere as its focus on the online-only model has been blamed for losing momentum in sales. While being upbeat on India, Lei sees many obstacles — from a complicated tax regime to weak infrastructure and poor broadband connectivity. Excerpts:

Do you agree with the view that India is next China?India is the most important market after China. We look forward to continue to grow in India. Similar to China, we believe that India will experience same transformation in 10 to 20 years.

PM Narendra Modi has focused a lot on Make in India initiative. Do you think India can become a factory to the world?Of course, we believe in that. We will first satisfy the needs of the local market... then we could consider the possibility of exporting.

Do you face problems regarding infrastructure, government policies?From an optimistic point of view, we believe that the Make in India initiative has been pushed and adopted widely. We still see a lot of obstacles. For example, a lot of states have different tax rates. This could further complicate manufacturing and sales aspect. We look forward to GST to come in. We think India's tax currently is much higher than China. Warehouse logistic costs are quite high. We also need a lot of effort in the transportation efficiency. Internet infrastructure is also a challenge. In China, 4G bandwidth is popular where a lot of cities are pushing for free Wi-Fi. We believe all these are worth the attention of the Indian government.

Will there be higher focus on brick-and-mortar stores now?Online enabled us to reach our dreams of high efficiency. We're trying to use the same Internet-plus philosophy when it comes to (offline) retail. In China, we initiated the concept of Mi Home. We're trying to reach the same efficiency level when we do offline retail compared to our online efficiency. We're trying to price it at the same level for offline as well. We need to ensure that there's value for money. We need to ensure that our channels and partners are also successful and make profits. Our focus this year will be to continue to extend our market share in online and then experiment with the Internet+retail concept.

How many stores will you require?We have expanded offline retail through 10,000 (multi-brand) shops. Recently, we have partnered with four big retail chains in South India. We are planning to open our own stores.

Do you intend to make investments in Indian startups?We have invested in a few Indian companies. We have announced our investments in Hungama, India's largest radio platform. We invested in a few more but we have not publicly disclosed them. Xiaomi has invested in 165 companies worldwide by 2016-end. We emphasize on building the ecosystem around us as smartphone is the infrastructure of mobile internet. It really requires a lot more applications and services to further accelerate the industry. So, we really believe in supporting mobile start-ups in India.

In China sales have been below expectations...In the past two years, we have indeed faced some challenges in China. It is mainly due to the fact that we reached 50% market share in the online smartphone market in China. For us to continue our growth, the key challenge is to enter offline. Last year, we made definitive improvements and progress in offline in China. We have made a major breakthrough in understanding how to do retail offline in an e-commerce manner. We are now back on track for rapid growth as our China momentum is picking up. We expect India business to grow over 100% this year.

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